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	<title>The Freeman &#124; Ideas On Liberty &#187; Jacob H. Huebert</title>
	<atom:link href="http://www.thefreemanonline.org/author/jh-huebert/feed/" rel="self" type="application/rss+xml" />
	<link>http://www.thefreemanonline.org</link>
	<description>Ideas on Liberty</description>
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		<title>Nullification: How to Resist Federal Tyranny in the 21st Century</title>
		<link>http://www.thefreemanonline.org/book-reviews/nullification-how-to-resist-federal-tyranny-in-the-21st-century/</link>
		<comments>http://www.thefreemanonline.org/book-reviews/nullification-how-to-resist-federal-tyranny-in-the-21st-century/#comments</comments>
		<pubDate>Wed, 21 Sep 2011 15:00:10 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Book Reviews]]></category>
		<category><![CDATA[constitutional limits]]></category>
		<category><![CDATA[federal courts]]></category>
		<category><![CDATA[federal power]]></category>
		<category><![CDATA[federalism]]></category>
		<category><![CDATA[Fugitive Slave Act]]></category>
		<category><![CDATA[Gonzales v. Raich]]></category>
		<category><![CDATA[government power]]></category>
		<category><![CDATA[Jim Crow laws]]></category>
		<category><![CDATA[limited power]]></category>
		<category><![CDATA[medical marijuana laws]]></category>
		<category><![CDATA[nullification]]></category>
		<category><![CDATA[Resolutions of 1799]]></category>
		<category><![CDATA[states' rights]]></category>
		<category><![CDATA[Thomas Woods]]></category>
		<category><![CDATA[Virginia Resolutions of 1798]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/?p=9356942</guid>
		<description><![CDATA[How can Americans restrain an out-of-control federal government that won’t recognize any constitutional limits on its power? In Nullification: How to Resist Tyranny in the 21st Century, Thomas Woods argues that state invalidation of federal laws could be the answer. First, though, Woods identifies what almost certainly won’t work: trying to effect change by sending [...]]]></description>
			<content:encoded><![CDATA[<p>How can Americans restrain an out-of-control federal government that won’t recognize any constitutional limits on its power? In <em>Nullification: How to Resist Tyranny in the 21st Century</em>, Thomas Woods argues that state invalidation of federal laws could be the answer.</p>
<p>First, though, Woods identifies what almost certainly won’t work: trying to effect change by sending different politicians to Washington or by fighting in the federal courts.</p>
<p>Trying to elect a president, senators, or representatives who will respect limits on federal power won’t work because no matter what they promise, politicians inevitably end up pandering to special interests to get campaign contributions and votes.</p>
<p>Trying to get the federal courts to limit federal power won’t work either, because those courts are, after all, part of the federal government. The President and the Senate take great care to make sure they don’t put anyone on the Supreme Court who would stop them from doing whatever they want.</p>
<p>Thus, Woods observes, the federal government gets to decide what the Constitution means and to make its own rules. No wonder it only gets bigger. “If the federal government has the exclusive power to judge the extent of its own power,” he writes, “it will continue to grow—regardless of elections, the separation of powers and other much-touted limits on government power.”</p>
<p>Woods’s solution to this problem is nullification—that is, recognizing the right of state governments to stand up to the federal government by declaring federal laws unconstitutional and refusing to enforce them.</p>
<p>This may sound radical and shocking to Americans who have been taught since grade school that the U.S. Supreme Court is the ultimate arbiter of what is constitutional. But as Woods shows, the concept is not new and was invoked numerous times in the early decades of the country’s existence. For example, in the Virginia Resolutions of 1798, written by James Madison, Virginia declared the Alien and Sedition Acts unconstitutional. Kentucky did the same in its Resolutions of 1799, written by Thomas Jefferson. Both looked to the state governments to protect their citizens from enforcement of the illegal federal laws. And before the Civil War northern states invoked nullification in refusing to enforce the Fugitive Slave Act.</p>
<p>Woods also shows that nullification has occurred more recently. For example, California has partially nullified an unconstitutional federal law by allowing its citizens to use marijuana for medical purposes, even in the face of a U.S. Supreme Court decision, <em>Gonzales v. Raich</em>, that held that the federal drug laws trumped the state medical-marijuana law. As a result of California’s continued defiance the feds backed down, at least temporarily.</p>
<p>To his credit, Woods is no Constitution worshipper. He favors nullification not because he unduly reveres the Founders or believes the Constitution to be divinely inspired but simply because, in his words, “institutional restraints that pit power against power might postpone or hobble a regime’s growth.”</p>
<p>Some readers may be hesitant to embrace a radical “states’ rights” view because of its common association with southern states’ defense of Jim Crow laws.</p>
<p>Woods addresses this by pointing out that the <em>federal</em> government violates the rights of both blacks and whites on a massive scale, with the burden of many unconstitutional interventions, such as the war on drugs, falling heaviest on blacks. He also observes that the federal courts <em>upheld</em> Jim Crow for decades. And he notes that “it is not Birmingham 1963 any longer,” so efforts to return to Jim Crow are extremely unlikely.</p>
<p>Important points, but some readers will want more. Even if Jim Crow won’t come back, people are right to notice that state governments have perpetrated great evils and to be concerned that states might do so again if given the chance. I share Woods’s preference for decentralization, and I have no doubt that he takes these concerns seriously, but the book might persuade more people if it gave more attention to this issue.</p>
<p>Regardless, what strikes one about the book is not what’s missing but what’s there: a wealth of information that teachers in classrooms from high schools to law schools never give their students. <em>Nullification</em> is therefore essential reading for its lessons in history and for showing how libertarians might achieve real-world successes in the years ahead.</p>
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		<title>This Is Your Country On Drugs: The Secret History of Getting High in America</title>
		<link>http://www.thefreemanonline.org/book-reviews/this-is-your-country-on-drugs-the-secret-history-of-getting-high-in-america/</link>
		<comments>http://www.thefreemanonline.org/book-reviews/this-is-your-country-on-drugs-the-secret-history-of-getting-high-in-america/#comments</comments>
		<pubDate>Wed, 24 Nov 2010 17:00:54 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Book Reviews]]></category>
		<category><![CDATA[D.A.R.E.]]></category>
		<category><![CDATA[drug prohibition]]></category>
		<category><![CDATA[drug use]]></category>
		<category><![CDATA[illegal drugs]]></category>
		<category><![CDATA[LSD]]></category>
		<category><![CDATA[marijuana]]></category>
		<category><![CDATA[Ryan Grim]]></category>
		<category><![CDATA[War on Drugs]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/?p=9348867</guid>
		<description><![CDATA[Americans really like to get high, and they’ll go out of their way to do so even when the government threatens to punish them. That’s the theme that comes through strongest in Ryan Grim’s This Is Your Country On Drugs, a look at the relationship among Americans, the drugs they use, and their government. The [...]]]></description>
			<content:encoded><![CDATA[<p>Americans really like to get high, and they’ll go out of their way to do so even when the government threatens to punish them.</p>
<p>That’s the theme that comes through strongest in Ryan Grim’s <em>This Is Your Country On Drugs</em>, a look at the relationship among Americans, the drugs they use, and their government.</p>
<p>The author, a relatively young man, isn’t shy about his own history of casually using and enjoying drugs, particularly hallucinogens. He discovered in the early 2000s that LSD was nowhere to be found—not only could he not find any for himself but statistics showed acid use was down in general.</p>
<p>Investigating further, Grim found that several factors had come together to make LSD unavailable. One was a success in the war on drugs: The DEA nabbed a longtime leading supplier, Harvard graduate William Leonard Pickard. Surprisingly (or not), another major factor was the breakdown of the LSD distribution system after the Grateful Dead disbanded, the band Phish stopped touring, and the groups’ concerts could no longer serve as major trading venues.</p>
<p>With LSD mostly gone, Americans didn’t stop seeking mind-altering experiences. They just turned to other substances that weren’t illegal, such as the herb salvia (still legal and readily available in most states), which offered even more intense trips.</p>
<p>Grim shows that this sort of thing has happened many times in U.S. history, both before and after drug prohibition began with the 1914 Harrison Narcotics Tax Act. One drug goes out, others come in. In the 1980s, for example, the Reagan administration decided to focus on fighting marijuana. That made pot expensive, so people switched to other drugs, including crack—a substance that might never have been invented but for Reagan’s antidrug policies.</p>
<p>The book also shows how government’s attempts to discourage drug use through propaganda often fail.</p>
<p>For example, in one chapter Grim considers the government’s D.A.R.E. program, in which police visit schools to teach students about drugs, and reports (as have others, including the Government Accountability Office and Surgeon General’s office) that the program has been a failure. Children who go through it tend to use drugs more than other children because the education makes them less afraid. Yet the program persists because it’s popular—with police and with parents who are relieved of the burden of talking to their kids about drugs themselves.</p>
<p>Anti-marijuana ad campaigns that have cost taxpayers more than $1.5 billion since 1998 also failed to produce any decline in minors’ drug use. Eventually marijuana use did drop, but not because of the ads; rather, kids began participating in more structured after-school activities and doing more of their socializing online. They didn’t stop using drugs, though. They just started taking illicitly obtained prescription pills instead.</p>
<p>Other chapters consider such topics as the harmful effects of the drug war on people in other countries and the relationship between the drug war and U.S. foreign policy. There are also detailed examinations of Americans’ history of using amphetamines and cocaine. And Grim looks at drug prohibition’s unsavory origins. For example, he shows how DuPont helped push marijuana prohibition to eliminate hemp as a competitor to its synthetic products, and he explores the role of bigotry against blacks and immigrants in the move toward prohibition.</p>
<p>All these chapters don’t really fit together neatly; Grim goes from one topic to the next without much transition. And he doesn’t explicitly push any public policy conclusions.</p>
<p>But his main themes come through clearly. One is, again, that Americans like to get high. Another is that what we’ve been told in propaganda from <em>Reefer Madness</em> to “This Is Your Brain on Drugs” ads isn’t quite true—doing drugs might not be a good idea, but most drug users don’t become crazed addicts. Another theme is that the war on drugs hurts a lot of people, from would-be medical-marijuana users, to poor South American coca growers, to the many young black men in prison.</p>
<p>The book is not a comprehensive guide to the evils of the drug war—things are actually worse than Grim suggests—but for people looking for a highly readable look at America’s relationship with drugs, <em>This Is Your Country On Drugs</em> is a good place to start. That’s true even if, like me (but unlike the author and millions of our fellow Americans), they would never do drugs themselves.</p>
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		<title>Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush</title>
		<link>http://www.thefreemanonline.org/book-reviews/who-killed-the-constitution-the-fate-of-american-liberty-from-world-war-i-to-george-w-bush/</link>
		<comments>http://www.thefreemanonline.org/book-reviews/who-killed-the-constitution-the-fate-of-american-liberty-from-world-war-i-to-george-w-bush/#comments</comments>
		<pubDate>Wed, 17 Jun 2009 21:29:41 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Book Reviews]]></category>
		<category><![CDATA[abuse of power]]></category>
		<category><![CDATA[Brown v. Board of Education]]></category>
		<category><![CDATA[commerce clause]]></category>
		<category><![CDATA[FDR]]></category>
		<category><![CDATA[george bush]]></category>
		<category><![CDATA[infrastructure spending]]></category>
		<category><![CDATA[John Yoo]]></category>
		<category><![CDATA[Lysander Spooner]]></category>
		<category><![CDATA[pork-barrel spending]]></category>
		<category><![CDATA[Roosevelt]]></category>
		<category><![CDATA[truman]]></category>
		<category><![CDATA[u.s. constitution]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/?p=9770</guid>
		<description><![CDATA[There have now been many conservative and libertarian books covering the demise of American liberty under the U.S. Constitution, so if you don’t think you need to read another one, I understand. Still, if that’s what you think, you’re wrong. The latest entry in the genre, Thomas Woods and Kevin Gutzman’s Who Killed the Constitution?, [...]]]></description>
			<content:encoded><![CDATA[<p>There have now been many conservative and libertarian books covering the demise of American liberty under the U.S. Constitution, so if you don’t think you need to read another one, I understand.</p>
<p>Still, if that’s what you think, you’re wrong.</p>
<p>The latest entry in the genre, Thomas Woods and Kevin Gutzman’s Who Killed the Constitution?, is something different. It’s well worth your while.</p>
<p>Unlike some other writers, Woods and Gutzman don’t just place the blame for our present situation on a handful of bad Supreme Court decisions. Instead, they show how, in the twentieth century, all three branches of the federal government have spun out of control, completely abandoning any pretense that the Constitution constrains them at all.</p>
<p>Woods and Gutzman demonstrate how the executive branch claims virtually unlimited power. President George W. Bush damaged the constitutional fabric significantly, and the authors demolish the dubious constitutional scholarship of Bush’s court intellectual, law professor John Yoo. They point out, too, that presidents never have trouble finding “scholars” like Yoo to rationalize their power grabs.</p>
<p>But the authors also show that Bush did not do much of anything new. All presidents since at least Harry Truman have assumed they could make war without a declaration from Congress. In fact, most presidents since Theodore Roosevelt have assumed, as he did, that they can do anything they want in the absence of a specific constitutional restriction on their power. (Gene Healy’s recent book, <a href="http://www.amazon.com/Cult-Presidency-Americas-Dangerous-Executive/dp/1933995157">The Cult of the Presidency</a>, reviewed in the <a href="http://www.thefreemanonline.org/book-reviews/cult-presidency-executive-power/">March <em>Freeman</em></a>, offers much additional detail on this subject.)</p>
<h2>A Litany of Abuses</h2>
<p>One chapter in particular illustrates this by exposing one of the worst, but most overlooked, government crimes in U.S. history: Franklin Roosevelt’s confiscation of everyone’s gold. This discussion also gives the authors an opportunity to offer an important bit of economic education as they explain why gold was used as money in the first place.</p>
<p>You might expect the chapter titled “Roads to Nowhere” to offer a familiar list of pork-barrel projects funded by Congress. Instead, the authors show that the federal government shouldn’t be funding roads at all, no matter where those roads go. Early presidents assumed they would need a constitutional amendment to fund “infrastructure” projects. Unfortunately, today they just assume it’s within their power and that assumption goes unchallenged.</p>
<p>Other chapters explore topics such as the Commerce Clause, which the courts have used to justify almost anything Congress does; the military draft, which violates the Constitution’s prohibition of slavery; presidential “signing statements” (written pronouncements by a president on signing a bill, often with the intent to modify the statute and especially to nullify its application to the executive branch), and President Truman’s attempt to nationalize the steel industry.</p>
<p>Two of the boldest chapters deal with what the authors call the “third rail of American jurisprudence”—Brown v. Board of Education and its aftermath. The authors show how Brown had no basis in the Constitution—and that the Supreme Court justices behind the decision knew it. Yes, the book’s authors actually say it: the Fourteenth Amendment’s text does not actually prohibit school segregation.</p>
<p>Even if that’s so, why attack this sacred cow when most everyone today opposes segregation anyway? Because if the Supreme Court can so utterly disregard the Constitution and the very idea of law in this decision to reach its own policymaking goals, then there really is no Constitution to speak of anymore. And that’s the point. As they say in their introduction, “the Constitution is dead.”</p>
<h2>Beyond Redemption</h2>
<p>Refreshingly, they don’t argue that the Constitution might be revived by electing the right people or bringing the right lawsuits. Indeed, they even suggest that our sorry result might have been inevitable—not only with this particular Constitution, but with any written constitution. After all, what do you expect will happen when you let federal officials determine the limits of the federal government’s power? That’s true regardless of who’s in office, or what they might say before being elected. Woods and Gutzman write: “People in power exercise all the power they can get, even after they have howled in the wilderness against legislating judges, imperial presidents, and the death of states’ rights.”</p>
<p>The authors also quote Lysander Spooner, who put the problem best when he wrote in the nineteenth century that the Constitution “has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist.”</p>
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		<title>Downtown Revitalization: City Governments Versus Consumers</title>
		<link>http://www.thefreemanonline.org/featured/downtown-revitalization-city-governments-versus-consumers/</link>
		<comments>http://www.thefreemanonline.org/featured/downtown-revitalization-city-governments-versus-consumers/#comments</comments>
		<pubDate>Tue, 01 Apr 2008 08:00:00 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Featured]]></category>
		<category><![CDATA[City Center]]></category>
		<category><![CDATA[Columbus]]></category>
		<category><![CDATA[downtown revitalization]]></category>
		<category><![CDATA[eminent domain]]></category>
		<category><![CDATA[Michael Coleman]]></category>
		<category><![CDATA[Ohio]]></category>
		<category><![CDATA[public-private partnerships]]></category>
		<category><![CDATA[subsidies]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/uncategorized/downtown-revitalization-city-governments-versus-consumers/</guid>
		<description><![CDATA[What a thrill to visit cities that have “revitalized” their downtown areas! From the empty streets to the government offices to the abandoned retail spaces—what&#8217;s not to like? Well, everything, of course. Not only are such areas unsightly and useless, they often come at the expense of millions of taxpayer dollars and eminent-domain coercion. There&#8217;s [...]]]></description>
			<content:encoded><![CDATA[<p>What a thrill to visit cities that have “revitalized” their downtown areas! From the empty streets to the government offices to the abandoned retail spaces—what&#8217;s not to like?</p>
<p>Well, everything, of course.</p>
<p>Not only are such areas unsightly and useless, they often come at the expense of millions of taxpayer dollars and eminent-domain coercion.</p>
<p>There&#8217;s nothing wrong with feeling a bit nostalgic for when everyone worked and shopped in a bustling downtown—although I happen to enjoy today&#8217;s so-called “sprawl,” especially as I think about how it demonstrates how well the market serves consumers with an ever-increasing variety of goods at ever-lower prices. But in any event, fuzzy feelings about downtown areas apparently aren&#8217;t very important to most people who do have them, because those people don&#8217;t put their money where their mouths are. They choose to live, work, and shop in outlying neighborhoods instead.</p>
<p>Voting, however, offers such people an opportunity to act on their emotions at virtually no personal cost. Thus we get government-sponsored “revitalize downtown” efforts in cities all across America that fail again and again.</p>
<p>My city of Columbus, Ohio, tried its own ridiculous plan along these lines about 20 years ago, when it built a downtown mall called the “City Center.” It opened in 1989 to much fanfare, filled with stores intended to lure suburbanites and others from all over the state.</p>
<p>And it did. For a very short time crowds indeed came. Politicians were quick to take credit for this putative victory—declaring “mission accomplished” like George W. Bush in Iraq within days of the mall&#8217;s opening—while the media praised them for having “the courage to ignore the criticism and continue with the project.”</p>
<p>An early manager of the mall declared it “almost competition-proof,” bringing to mind certain claims about the “unsinkable” Titanic. A visitor in those first days breathlessly told a newspaper reporter that the mall&#8217;s “novelty will never wear off.”</p>
<p>Now, though, the mall is just about empty. Entrepreneurs saw opportunities soon after it opened to put malls where people actually wanted them, in the suburbs circling the city, and that is where everyone goes—including city-dwellers like me.</p>
<p>There are no more “anchor” stores in the City Center. The mall&#8217;s third floor—once home to only the most upscale stores—in recent years housed a public school in a former Henri Bendel space, and now even that&#8217;s closed. The second floor—with a Sunglass Hut and nothing else—is thriving by comparison.</p>
<p>The ground floor is mostly empty, too, but it does have a food court of sorts, plus such attractions as a dollar store, stores offering what one might charitably call “urban fashions,” and a tattoo parlor.</p>
<p>It&#8217;s fitting that a government mall would have nothing inside it, because government produces nothing. It is empty on the inside and ugly on the outside, with almost no glass or windows, but rather just a big brick lump where once there were houses and businesses, before the government bulldozer came.</p>
<p>The total cost to taxpayers to put up this now-abandoned monstrosity? More than $72 million—plus ample eminent-domain compulsion to destroy what little old-fashioned life and color the area used to possess.</p>
<h4>One More Attempt</h4>
<p>But never fear. Mayor Michael Coleman has come up with a solution. The city has decided to simply take the mall back from the private-public partnership that had been in charge of it, and this time the government will get it right.</p>
<p>But although the names of the politicians may have changed since 1989, the economic reality never will. Government planners lack the incentive and ability to accurately forecast what consumers want. They are driven by political considerations and, at best, by what they wish people would do. In contrast, entrepreneurs in a free market have an incentive to determine what consumers really want and provide it, because they put their own cash—not taxpayers&#8217; money—on the line.</p>
<p>So-called public-private partnerships do not and cannot resolve this problem because in such cases (as with my local empty mall), the market is distorted. Businesses respond to government-created incentives, not consumer preferences.</p>
<p>Some might try to rebut this by pointing to government-subsidized projects that appear to have succeeded. But these prove nothing. Undoubtedly, many such cases involve businesses getting government help to do something they would have done anyway, and thus amount to little more than a gift from hard-working taxpayers to politically connected business owners.</p>
<p>The only way to determine what consumers want in the former mall space is to sell the land and the building to the highest private-sector bidder with no strings attached.</p>
<p>Does that mean a flourishing mall or some new attraction will take the place of the government disaster and have everyone flocking downtown? No. Plenty of private buildings in downtown areas struggle with high vacancies and will continue to do so. Indeed, sometimes the most efficient thing for an entrepreneur to do is to leave a building empty until a time when it can be put to a higher and better use than present conditions allow. All we can say for certain is that private hands are by their nature more likely than political hands to succeed in determining what people really want most.</p>
<p>That idea may frustrate politicians who imagine themselves capable of wishing a specific vision of a downtown into existence and of making people want something they have demonstrated again and again they do not want. But there is no fairy godmother to wave her magic wand for city politicians and their economically illiterate gaggle of planners.</p>
<p>The reality is that mayors and council members may nominally rule their cities, but the dead mall at the heart of Columbus, Ohio—like so many other “downtown revitalization” projects—stands as a monument to their impotence, and to the fact that in the free market, the consumer is king.</p>
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		<title>Environmentalists in Outer Space</title>
		<link>http://www.thefreemanonline.org/featured/environmentalists-in-outer-space/</link>
		<comments>http://www.thefreemanonline.org/featured/environmentalists-in-outer-space/#comments</comments>
		<pubDate>Sat, 01 Mar 2008 08:00:00 +0000</pubDate>
		<dc:creator> and Jacob H. Huebert</dc:creator>
				<category><![CDATA[Featured]]></category>
		<category><![CDATA[biodiversity]]></category>
		<category><![CDATA[deep ecology]]></category>
		<category><![CDATA[Earth First!]]></category>
		<category><![CDATA[ecocentric environmentalism]]></category>
		<category><![CDATA[environmentalism]]></category>
		<category><![CDATA[environmentalists]]></category>
		<category><![CDATA[extraterrestrial life]]></category>
		<category><![CDATA[Jupiter]]></category>
		<category><![CDATA[Mars]]></category>
		<category><![CDATA[Mercury]]></category>
		<category><![CDATA[moons]]></category>
		<category><![CDATA[Neptune]]></category>
		<category><![CDATA[outer space]]></category>
		<category><![CDATA[planets]]></category>
		<category><![CDATA[private property rights]]></category>
		<category><![CDATA[Saturn]]></category>
		<category><![CDATA[solar system]]></category>
		<category><![CDATA[space environmentalism]]></category>
		<category><![CDATA[space pollution]]></category>
		<category><![CDATA[statism]]></category>
		<category><![CDATA[terraforming]]></category>
		<category><![CDATA[Uranus]]></category>
		<category><![CDATA[Venus]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/uncategorized/environmentalists-in-outer-space/</guid>
		<description><![CDATA[J. H. Huebert (jhhuebert@jhhuebert.com) is an attorney and a former FEE intern. Walter Block (wblock@loyno.edu) is Harold E. Wirth Eminent Scholar Chair in Economics and professor of economics at Loyola University, New Orleans. A longer version of this article appeared in the University of Memphis Law Review. Save the earth! That&#8217;s been the mantra of [...]]]></description>
			<content:encoded><![CDATA[<p><em>J. H. Huebert (<a href="mailto:jhhuebert@jhhuebert.com">jhhuebert@jhhuebert.com</a>) is an attorney and a former FEE intern. Walter Block (<a href="mailto:wblock@loyno.edu">wblock@loyno.edu</a>) is Harold E. Wirth Eminent Scholar Chair in Economics and professor of economics at Loyola University, New Orleans. A longer version of this article appeared in the University of Memphis Law Review.</em></p>
<p>Save the earth! That&#8217;s been the mantra of environmentalists for decades. But now they want more. They not only want to tell us what we can do on the earth, but also what we can do off the earth, in outer space.</p>
<p>Yes, statist environmentalists are already concerned about the alleged threat to the outer-space environment posed by humanity. Humans have already defiled the earth, they say, so why should we be allowed to do it to the rest of the universe?</p>
<p>We find their proposed environmental programs for outer space wholly unjustified. In their place, we propose pure private property rights.</p>
<p>Almost no one would say he&#8217;s an enemy of the environment. Everyone wants clean air to breathe and clean water to drink, and no one wants anyone to invade his person or property with harmful substances. People (like us) who go this far—and only this far—with their environmentalism probably comprise the majority of humanity.</p>
<p>In the second half of the twentieth century another type of environmentalism arose: ecocentric (rather than anthropocentric) environmentalism, or “deep ecology.” According to ecocentrism, Mikael Stenmark writes, only “ecological wholes (such as species, ecosystems, the land or the biotic community) . . . have a value in themselves . . . and . . . the value of the ecological parts . . . is determined by how far they contribute to the survival and well-being of the ecological whole.”</p>
<p>The ecocentric view extends its concern to the entire earth, dirt and rocks included. Everything (except humans, apparently) is seen as possessing “intrinsic value” (value somehow derived from itself, not from man), which is destroyed or threatened by any human tampering. Holmes Rolston III writes, “Earth does not belong to us; rather we belong to it. . . . Earth is really the relevant survival unit.”</p>
<p>This philosophy&#8217;s real-world implications can be seen in the activities of the Earth First! organization, which is known for putting spikes in trees so lumberjacks or mill workers who cut them may be injured or killed. Earth First! leader Richard Foreman states the ends of ecocentric environmentalism: “We advocate bio-diversity for bio-diversity&#8217;s sake. That says man is no more important than any other species . . . . It may well take our extinction to set things straight.”</p>
<p>Considering the focus on the earth and “biodiversity,” one might expect that we would be spared the down-with-humans-up-with-dirt-and-rocks rhetoric with respect to man&#8217;s activity beyond the earth. Unfortunately, this has not been so. As Howard A. Baker writes in the law journal <em>Annals of Air and Space</em>, “With an environmental approach, protection of the outer space environment and its sub-systems is the priority, [not] ensuring that outer space can be used for [human] space activities.” In <em>Law, Values, and the Environment</em>, Robert N. Wells Jr. adds, “Outer space, a source of wonder and inspiration for centuries, deserves to be preserved in its original pristine state, for its own sake and for future generations to enjoy.” And April Greene Apking, writing in the Journal of International Environmental Law and Policy, writes, “[W]e must ensure that our presence [in space] does not defile what remains one of the few accessible pristine areas.”</p>
<p>These radical views even have found their way into the work of relatively moderate writers. Glenn H. Reynolds and Robert P. Merges, for example, generally favor private property rights, but make an exception for “environmental research and conservation preserves,” which would place “10 to 15 percent of the area capable of being developed” off limits.</p>
<p>To speak of a “pristine” outer-space environment is a rather strange thing to do, given how utterly unpleasant the rest of the universe appears to be. Mercury, for example, has no atmosphere, and portions of its surface become hot enough to melt tin, while others remain cold enough to keep ice from crashed comets perpetually frozen—with little remotely pleasant in between.</p>
<p>Venus is even worse. Its atmosphere is almost pure carbon dioxide, complemented by thick clouds of something like battery acid. Its atmospheric pressure is 92 times greater than earth&#8217;s, so any visiting astronaut in a normal spacesuit would be crushed instantly. The mean surface temperature is 480 degrees Celsius.</p>
<p>Earth&#8217;s moon is relatively less hateful, but it has no atmosphere, of course, and has never supported liquid water, let alone life.</p>
<p>Mars is dead, too. There is no conclusive evidence for life there, either now or in the past. Its atmosphere consists mostly of deadly carbon dioxide, and its mean surface temperature is negative 23 degrees Celsius.</p>
<p>Jupiter, Saturn, Uranus, and Neptune are covered in extremely large, cold, and stormy mixes of toxic liquids and gasses. Some of these distant planets&#8217; moons might be of some use, but are nonetheless wholly inhospitable. For example, one of Jupiter&#8217;s moons, Europa, is covered in water ice and may have liquid water and possibly some sort of microscopic life beneath its frozen surface. And Saturn&#8217;s moon Titan has, like earth, a mostly nitrogen atmosphere—at negative 180 degrees.</p>
<p>Where there is no atmosphere, as on the moon, the environment is far from healthy. Spaceships and spacesuits must be well shielded to protect against the sun&#8217;s radiation.</p>
<h4>Bad to Worse</h4>
<p>All of that may sound bad, but in fact the space environment is only going to become much worse. That&#8217;s because our sun will eventually change to a “subgiant” star, then a Red Giant, then a nebula, then a White Dwarf, then a Black Dwarf. In the end, all the planets, including earth, will lose their atmospheres and exist at a temperature just a few degrees above absolute zero.</p>
<p>In sum, the space environment is so bad right now that, from anything other than a human-hating perspective, it could not get much worse—except that billions of years from now, it will get worse, and there is nothing anyone can do about that.</p>
<p>Considering the solar system&#8217;s present and future environmental state, the idea of space pollution becomes absurd.</p>
<p>Air pollution? As we&#8217;ve seen, there is no air on the moon—and to the extent that our neighboring planets have an atmosphere at all, it&#8217;s almost entirely carbon dioxide, which is toxic and the bane of environmentalists when produced by humans here on earth. Thus nothing we could do to other celestial bodies could make the “air” more toxic than it already is.</p>
<p>Water pollution? There is no surface liquid water anywhere but on earth.</p>
<p>Radiological pollution? There&#8217;s already dangerous radiation in space against which humans must shield themselves. The Mars atmosphere may limit the amount of radiation on its surface—but given its poison-gas environment, not to mention its already highly toxic soil, how much worse would some radiation here and there make the planet?</p>
<p>To speak of pollution or contamination of space in the abstract—apart from human beings&#8217; property rights—makes no sense.</p>
<p>Law professor Lawrence D. Roberts suggests that “[u]biquitous commons [sic] resources on Earth such as air and water will likely pose the same kinds of environmental challenges for space developers as they do for Earth developers,” adding, “The need to recycle such valuable commodities will require stringent regulation of the discharge of hazardous byproducts into the waste stream.” We find this implausible. If there&#8217;s any air or surface water on the moon or elsewhere in space, how did it get there? It could only be from humans who brought or created it there. Where would it be found? Inside the space vehicles or other structures people brought or built there. And here we get to the key space environmental policy: to protect humans&#8217; environment in space, we need only protect their private property rights.</p>
<p>On earth such a policy has presented some technical difficulties. For example, it may be difficult to determine which factories contributed to victims&#8217; air or water pollution and in what amounts, as contaminants may travel imperceptibly over long distances. Pollution victims may also suffer very small harms individually such that a lawsuit would cost them more than it was worth. Those problems are not insurmountable in the earthbound context—technological advances and the availability of class-action lawsuits should make them decreasingly problematic—but they do exist.</p>
<p>In space, though, apart perhaps from radiological poisoning, some sort of clear physical invasion would be necessary for anyone to pollute anyone else&#8217;s air or water. Thus enforcement of a property-rights regime for pollution should be simple and effective.</p>
<h4>Lunar-Dust Pollution</h4>
<p>Some have said we need environmental regulation on the moon to prevent pollution from lunar dust. But why should this be a problem? There&#8217;s no atmosphere, and it seems likely that those using the moon for mining and those using it for recreational purposes or for a good view of the earth would rationally spread themselves apart. With relatively few parties and a strong incentive to spread out, we can imagine that people might bargain either in advance to avoid conflicts or later do so to eliminate them.</p>
<p>Of course, to the extent that polluters (whether by dust, chemicals, radiation, or anything else) arrive at the moon first, they may establish property rights there, including the right to “pollute.” Where no one has already homesteaded lunar or planetary land, a mine or factory owner may homestead an easement to “pollute” the surrounding area that his operation affects. Then new arrivals will know that they should not locate in the area the established industrial operation affects unless they are willing to subject themselves to the industry&#8217;s byproducts.</p>
<p>On the other hand, where owners of hotels, golf courses, “wilderness” preserves, and the like arrive first, they will homestead their land, including the right not to be disturbed by pollution. Should someone trespass on their property with any form of pollution, they will be entitled to both damages and injunctive relief, just as pollution victims were in Great Britain and the United States through the 1830s.</p>
<p>One of the most promising uses for space is, of course, as a waste dump. This should be cause for environmentalist celebration, not alarm.</p>
<p>For example, nuclear electric power is far better for the environment than fossil fuels, which pollute the air and cause countless health problems. But what to do with the small amount of toxic waste it creates? Once space flight becomes sufficiently affordable, the answer becomes simple: send it on a long, long trip. Who but the most fanatical “cosmo-centrist” could be disturbed by sending our waste to Venus, an already hellish place where no living creature will likely ever go? The only colorable objection to this is that the waste might pose a risk to people on earth as it leaves the atmosphere (say, if the ship carrying it explodes or crashes, as NASA vehicles are wont to do). But presumably that risk would shrink as the private sector moves further into space transportation and space technology advances. For example, a space elevator would not entail the high risks or costs of ordinary space flight. And, of course, carriers of hazardous waste would be liable for harm they cause—which, along with their financial investment, would encourage them to take extreme care.</p>
<p>Another potential benefit would be to move polluting industrial operations off-planet. Again, environmentalists who really care about the well-being of humans or life generally (as opposed to rocks and dirt per se) should delight in this prospect.</p>
<p>As we&#8217;ve mentioned, some have called for part or all of outer space to be declared an untouchable “wilderness.”</p>
<p>We find this to be a rather strange preoccupation. Right now space is a de facto 100 percent wilderness preserve and will remain so even if humans go there in large numbers.</p>
<p>If environmentalists wanted to preserve specific areas, they could buy or simply homestead land, which some of them have done on earth. Governments, though, have little incentive or ability to determine which parts of any celestial body are best used as wilderness preserves and which are best put to other purposes. Such determinations would surely be corrupted by the influence of special interests, just as special interests have influenced terrestrial environmental laws to the benefit of polluters. Indeed, the U.S. government&#8217;s management of its national parks has been dismal, as have governments&#8217; overall environmental records. So if optimal preservation of that which is valuable to scientists and other admirers of pristine lunar wilderness is the goal, the answer again is strictly enforced private property rights.</p>
<p>It is entirely unjust for “wilderness” advocates to use government to prevent others from developing their property in space. They may speak in terms of intrinsic value, but they really seek to use the law to forcibly place their personal aesthetic preferences above those of others, and above the welfare of the human race.</p>
<h4>Terraforming</h4>
<p>What about “terraforming”? This would involve transforming an alien environment to give it a climate more like earth&#8217;s. Fantastic though it sounds, this may be technologically feasible on Mars. Essentially, it would involve initiating “global warming” through the release of CF4 into the now very sparse Martian atmosphere, raising its temperature by ten degrees Celsius within several decades, which would cause an increase of water vapor in the atmosphere, further warming the planet. Next, humans could release “methanogenic and ammonia-creating bacteria into the now-livable environment,” quoting Robert Zubrin, creating even more greenhouse gases. “The net result of such a program could be the creation of a Mars with acceptable atmospheric pressure and temperature, and liquid water on its surface within fifty years of the start of the program.” (Zubrin is quoted in Glenn H. Reynolds, “Space Law in the 21st Century: Some Thoughts in Response to the Bush Administration&#8217;s Space Initiative,” Journal of Air Law and Commerce.) Mars would not then have a breathable atmosphere, writes Glenn Reynolds, “but would support crops and allow people to move around without spacesuits.”</p>
<p>Those who want a “pristine” outer-space environment hate this idea, but we see no problem with it. If no one owned property on Mars before terraforming apart from the terraformers, property rights wouldn&#8217;t be an issue—the terraformers would have a right to do as they please. They would not own the whole planet, though, but only the parts with which they actually “mixed their labor.”</p>
<p>If other property owners were present, they would likely welcome terraforming because it would make their own property more useful to them. Some, though—especially scientists researching the planet&#8217;s history—might not welcome the radical changes to the planet. But the right to be protected against weather one finds undesirable has never been recognized, to our knowledge.</p>
<h4>No Legal Standing</h4>
<p>Of course, non-property-owning environmental activists on earth—those most likely to challenge terraforming—would have no standing to challenge this process of development. Again, their aesthetic tastes should not be given priority over the preferences of those with an actual stake in the matter (property owners) and over the good of the human race generally.</p>
<p>Some have suggested that space settlers should be restricted because extraterrestrial life is possible. We disagree. There is no evidence that life exists or has ever existed anywhere except earth. And even if it does exist, there is no reason to think government is necessary to protect it.</p>
<p>Human beings are fascinated by the idea of extraterrestrial life. Anyone who goes to space for any purpose is likely to be interested in checking for signs of past or present life on his property before acting in a way that might destroy those signs. For the intellectually uncurious, there would still be financial incentives. For example, scientific or environmental organizations could offer prize money for discovery of evidence of extraterrestrial life; a property owner who discovers such evidence could sell scientists, journalists, and others rights to access, study, and publicize it. Only governmental intervention (say, stripping individuals of property rights when something of scientific interest is found on their property) is likely to cause incentives to run in any other direction.</p>
<p>Space environmentalism lacks any justification, and its only philosophical foundation is a most extreme form of environmentalism to which very few people seriously subscribe. For the good of the human race, and because it is just, private parties should be free to use space for whatever human purposes they see fit within the limits of private property rights.</p>
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		<title>Downsizing the Federal Government</title>
		<link>http://www.thefreemanonline.org/book-reviews/downsizing-the-federal-government/</link>
		<comments>http://www.thefreemanonline.org/book-reviews/downsizing-the-federal-government/#comments</comments>
		<pubDate>Tue, 01 May 2007 08:00:00 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Book Reviews]]></category>
		<category><![CDATA[Chris Edwards]]></category>
		<category><![CDATA[interventionism]]></category>
		<category><![CDATA[Medicare]]></category>
		<category><![CDATA[Murray Rothbard]]></category>
		<category><![CDATA[Public Choice]]></category>
		<category><![CDATA[Social Security]]></category>
		<category><![CDATA[special-interest groups]]></category>

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		<description><![CDATA[By Chris Edwards Reviewed by J. H. Huebert]]></description>
			<content:encoded><![CDATA[<p>Cato Institute • 2005 • 250 pages • $20.00 hardcover; $12.00 paperback</p>
<p>Leonard Read once said that if there were a button that would instantly eliminate all government intervention, he would push it. But since no such button exists, and the federal government is so overwhelmingly large, one who really wants to go about reducing government might reasonably ask: where to begin? A book by Cato Institute scholar Chris Edwards, <em>Downsizing the Federal Government</em>, offers some ideas on that question.</p>
<p><em>Downsizing the Federal Government</em> details the many ways in which the federal government takes our money and spends it on things that are often not merely wasteful, but also harmful. As a solution, it recommends widespread cuts and elimination of major programs. For example, it proposes an end to farm subsidies, corporate welfare, federal housing, and subsidized loans, among many other programs. It calls for complete privatization and revocation of privileges for government-run “businesses,” such as the United States Postal Service, Amtrak, and the Tennessee Valley Authority.</p>
<p>The book also calls for steps to prevent new programs from arising and becoming entrenched. For example, Edwards advocates inclusion of a “sunset” provision in all programs and regulations, which would terminate them after a fixed period. He argues, rightly, that advocates of intervention should bear the burden to show why their proposed programs are necessary; the presumption always should be in favor of more liberty and less government.</p>
<p>Though it is refreshing to see a book published in Washington, D.C., that considers ways to reduce rather than expand the federal government, <em>Downsizing the Federal Government</em> is not perfect.</p>
<p>The book too often implicitly or explicitly accepts interventionist premises. For example, it concedes that government might be competent or desirable to perform certain functions, such as provide so-called “public goods.” While a smaller government such as the one Edwards endorses would indeed be far preferable to the present federal behemoth, a government of any size or scope is nothing more than organized violence and, Ludwig von Mises noted, “the negation of liberty.” <em>Downsizing the Federal Government</em> would have done well to acknowledge this.</p>
<p>More disturbing is the book&#8217;s endorsement of Social Security and Medicare “personal accounts,” such as those proposed by President Bush and other politicians. These schemes would not increase freedom because they would still forcibly take money from individuals and use it in ways government planners consider best. To genuinely increase liberty in these areas, we need more radical changes that would allow people to keep their own money and use it for any purpose.</p>
<p>One must also wonder who the audience is for this book. Through no fault of the author, detailed descriptions of federal programs and budget numbers are not exactly captivating reading for those of us not fully immersed in the world of public policy. And such facts and figures—again, through no fault of the author—become outdated quickly, as programs proliferate and budgets burgeon. Government will always need to be reduced, of course, but the specifics to which this book devotes so many pages will change—probably some already have. So the book seems to have a limited period of direct usefulness.</p>
<p>Of course, one would like to imagine that our lawmakers will read the book, have a road-to-Damascus experience, and begin making Edwards&#8217;s proposed cuts immediately. But that will not happen. As Public Choice economists and common sense tell us, politicians are personally motivated to serve interest groups and get reelected. Despite their righteous rhetoric, most are not sincerely interested in what is best for everyone or in reducing the state power they&#8217;ve worked so hard to seize. Instead, politicians are essentially plunderers who steal from the productive and give to the politically favored. This book therefore will not help educate politicians—they know very well what they&#8217;re doing, and that&#8217;s why they&#8217;re in Washington in the first place.</p>
<p>Still, <em>Downsizing the Federal Government</em> is largely an admirable book and—at least by Washington standards—a radical one. And it is always possible that some idea within it will find its way to some politician who can use it to his advantage while marginally increasing our liberty. Murray Rothbard, perhaps the most radical libertarian of all, wrote that the supporter of liberty “must take any and every opportunity to chop away at the State, whether it&#8217;s to reduce or abolish a tax, a budget appropriation, or a regulatory power.” <em>Downsizing the Federal Government</em> shows numerous ways in which those in power could begin to reduce and abolish right now—if they wanted to.</p>
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		<title>Book Review: Paying with Plastic: The Digital Revolution in Buying and Borrowing, 2nd edition, by  David S. Evans and Richard Schmalensee</title>
		<link>http://www.thefreemanonline.org/book-reviews/book-review-paying-with-plastic-the-digital-revolution-in-buying-and-borrowing-2nd-edition-by-david-s-evans-and-richard-schmalensee/</link>
		<comments>http://www.thefreemanonline.org/book-reviews/book-review-paying-with-plastic-the-digital-revolution-in-buying-and-borrowing-2nd-edition-by-david-s-evans-and-richard-schmalensee/#comments</comments>
		<pubDate>Mon, 01 May 2006 16:42:05 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Book Reviews]]></category>
		<category><![CDATA[credit cards]]></category>
		<category><![CDATA[human action]]></category>
		<category><![CDATA[money and banking]]></category>

		<guid isPermaLink="false">http://www.thefreemanonline.org/?p=9344957</guid>
		<description><![CDATA[Paying with Plastic: The Digital Revolution in Buying and Borrowing, 2nd edition by David S. Evans and Richard Schmalensee MIT Press • 2005 • 367 pages • $62.00 hardcover; $24.95 paperback Reviewed by J. H. Huebert The market has an amazing ability to induce voluntary coop­eration among millions of people around the globe to provide [...]]]></description>
			<content:encoded><![CDATA[<h4>Paying with Plastic: The Digital Revolution in Buying and Borrowing, 2nd edition</h4>
<p><em>by David S. Evans and Richard Schmalensee</em></p>
<p>MIT Press • 2005 • 367 pages • $62.00 hardcover; $24.95 paperback</p>
<p>Reviewed by J. H. Huebert</p>
<p>The market has an amazing ability to induce voluntary coop­eration among millions of people around the globe to provide goods and services we tend to take for granted. Leonard Read showed this by telling the story of a simple lead pencil. In <em>Paying with Plastic, </em>the authors relate the similarly impres­sive story of the credit card.</p>
<p>Today, of course, you can use your credit card almost anywhere to buy anything. But not long ago, credit cards were unheard of. If you wanted to borrow money, you went to the bank and took out a loan. Or you might have had a charge account at a store you frequented— but your bill had to be paid off each month. Early charge arrived in the 1950s, worked the same way, requiring full payment each month, and were narrowly targeted at business travelers.</p>
<p>Credit cards as we know them didn&#8217;t really exist until the late 1960s, when banks across the country joined together to form the organizations we now know as MasterCard and Visa. Few people who use credit cards today know the massive amount of voluntary coopera­tion that was required to bring them into existence and make our everyday card purchases possible.</p>
<p>Consider, for example, that MasterCard and Visa are joint ventures, owned by all the banks that issue those cards or offer accounts to merchants who accept them. As the authors note, the member banks remain com­petitors in all facets of their business, <em>even the credit-card </em><em>issuing business, </em>but nonetheless cooperate at the card-system level to set standards and allow consumers to use the same cards across the country, and around the world, regardless of whom they bank with.</p>
<p>This should give pause to statists who insist we need antitrust laws to prevent businesses from collaborating with each other. Here we have banks “conspiring” in a way that unquestionably benefits consumers by maxi­mizing both convenience and competition.</p>
<p>Inventing the cards was one thing — but it&#8217;s another free-market miracle that anyone uses them. After all, when the Visa card and MasterCard were created, no consumers had one, and no businesses accepted them. The banks had to figure out how to make consumers want a credit card no one accepted and how to make businesses accept credit cards no one carried! <em>Paying with </em><em>Plastic </em>explains how they did it.</p>
<p>And you may have noticed that when a merchant swipes your credit card, he does so through the same ter­minal, regardless of what type of card it is. How can one little machine not only handle different card brands, but also move money between the various banks involved, all in about two seconds? Again, the book provides an easily understood explanation. And although the authors don&#8217;t consider this implication, their discussion of this issue made me think about how the use of free-market money (say, gold) would be easier than ever given mod­ern technology.</p>
<p>If the book&#8217;s story has a villain, it is government. Many states, for example, have obstructed the growth of credit cards through usury laws — that is, they have imposed price controls. (Banks escaped this problem by moving their offices to friendlier states, such as South Dakota.) And, of course, federal antitrust authorities are always looking for new reasons to harass businesses that have done nothing more than voluntarily cooperate with consumers and each other. The authors do a fine job of explaining the economics of those and other gov­ernment interventions and how they harm consumers.</p>
<p>Unfortunately, the authors fail to note that banks themselves are not without fault — they benefit from government intervention that allows them to inflate the money supply and effectively steal from all of us. And the book&#8217;s brief history of money and banking also treats the abandonment of the gold standard too lightly.</p>
<p>Despite these shortcomings, the book focuses on those aspects of the credit-card business produced by peaceful cooperation. It shows how the market, not gov­ernment, coordinates human action on a grand scale to advance human welfare.</p>
<p>Accordingly, I recommend <em>Paying with Plastic </em>not only to those who want to know more about credit cards — and given their ubiquitous role in our lives, you <em>should </em>learn about them — but also to anyone seeking a detailed example of the great things even a hampered market can achieve.</p>
<p><em>J. H. Huebert (jhhuebert@globalweyermedia.com) is an attorney and a former FEE intern.</em></p>
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		<title>Free-Market Justice Is in the Cards</title>
		<link>http://www.thefreemanonline.org/featured/free-market-justice-is-in-the-cards/</link>
		<comments>http://www.thefreemanonline.org/featured/free-market-justice-is-in-the-cards/#comments</comments>
		<pubDate>Fri, 01 Apr 2005 08:00:00 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Featured]]></category>
		<category><![CDATA[bank transactions]]></category>
		<category><![CDATA[chargebacks]]></category>
		<category><![CDATA[consumer protection]]></category>
		<category><![CDATA[credit cards]]></category>
		<category><![CDATA[voluntary exchange]]></category>

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		<description><![CDATA[Nearly everyone takes it for granted that if government did not protect consumers from fraud, no such protection would be provided. The free market, however, protects consumers in countless ways, all without any government intervention. In fact, it does so more efficiently and effectively than the government can. One of the most impressive examples of [...]]]></description>
			<content:encoded><![CDATA[<p>Nearly everyone takes it for granted that if government did not protect consumers from fraud, no such protection would be provided. The free market, however, protects consumers in countless ways, all without any government intervention. In fact, it does so more efficiently and effectively than the government can.</p>
<p>One of the most impressive examples of free-market justice involves something that might be in your pocket right now: your credit card. Through voluntary contractual arrangements—motivated by nothing more than a desire for customers and profit—credit-card companies provide an entirely private means of recourse when a merchant wrongs a customer.</p>
<p>Visa and MasterCard, the two most popular credit cards, are brand names jointly used by banks that have gotten together to issue the cards. Every bank that belongs to the Visa or MasterCard association can also open accounts for merchants who wish to accept the cards. The very existence of these organizations is a testament to the free market’s ability to overcome the challenges of coordination to deliver to consumers the products they desire.</p>
<p>To understand how credit-card companies provide justice for consumers, we must first understand how an ordinary credit-card transaction works. Suppose Jones buys a camera from a merchant for $500 using his Visa card, which was issued to him by Bank A. The merchant, however, has a Visa merchant account through Bank B. How is the payment accomplished?</p>
<p>Today, it is most common for stores to have electronic terminals for processing credit-card transactions. So Jones would swipe his card through this terminal. When he does this, the terminal first determines that it is a Visa card rather than one of the other cards the merchant accepts. Then information about Jones’s card goes to the computers of the bank with which the merchant has his Visa merchant account, Bank B. Bank B’s computers contact Visa’s central computer, which looks up Jones in its system and sees that his card was issued by Bank A. Visa then transmits an inquiry to Bank A to see if Jones has sufficient credit to buy the camera. The answer to that inquiry will come back to Visa, which will pass it back to Bank B, which in turn will pass it back to the merchant. If the answer is no, because Jones does not have enough credit, he will not be able to make the purchase. If the answer is yes, he will sign the familiar slip accepting the charge to his credit card, and that will complete the sale. Today, this entire process may take as little as two seconds.</p>
<p>The merchant, of course, still needs to be paid. He transmits the request for payment to Bank B. That request goes through the same channels as the authorization request. The cardholder’s bank pays the merchant’s bank, which then pays the merchant. At that point, it is up to the cardholder’s bank to collect the amount due from the cardholder.</p>
<p>The banks make money from this process through the “merchant discount” they charge. This is often around 2 percent. In the case of Visa, for example, 1.4 percent goes to the card issuer. This is called an “interchange fee” and is set by Visa. The remainder, 0.6 percent, goes to the merchant’s bank.</p>
<h2>When Things Go Wrong: The Government Solution</h2>
<p>What if Jones’s camera is something other than advertised? What if he was promised one kind of lens and got a different, inferior one, or the camera just doesn’t work? Because of the free market’s incentive to satisfy customers, most stores would allow Jones to make an exchange or get his money back. But surely there are some disreputable merchants who would not do this for Jones, since they are out to make a quick buck with no concern for their long-erm reputations. Thus sometimes a consumer must appeal to a third party for redress.</p>
<p>If Jones had paid cash for the camera, his only recourse would be to go to a government court, probably his local small-claims court. Filing a lawsuit, even in a small-claims court, is costly, cumbersome, and time-consuming. In most jurisdictions, one must pay a fee just to file a suit. To have a reasonable chance of success, a defrauded consumer probably would need to hire a lawyer. If the seller he is suing is large and sophisticated, it might have superior lawyers who are experienced in fighting consumer lawsuits, perhaps often killing them quickly through procedural maneuvers and the like. Alternatively, the merchant might not show up to defend himself against small claims and the plaintiff would win. But then he would have to collect a judgment, which might be difficult to impossible. A large percentage of small-claims-court judgments are never collected at all, perhaps because the defendant is insolvent or located prohibitively far away, making the lawsuit a waste of the plaintiff’s time and effort, as well as a waste of taxpayer dollars.</p>
<p>The cash-paying customer with a complaint may also have problems with evidence. What if he has lost his receipt? The case might come down to his word against the seller’s.</p>
<p>The customer who pays with cash or a money order is in even worse shape if he buys something from someone located in another country. If a customer located in the United States sues a foreign merchant in an American court, it may not have jurisdiction or the ability to enforce a judgment against the seller even if the customer wins.</p>
<p>If the customer tries to sue in the foreign country, he will almost certainly have to be present there and will have to hire a foreign lawyer. Even if this were not a major obstacle, the foreign country’s legal system might be significantly less accessible than that of the United States, even for locals, especially in developing countries. Then, of course, there are the further potential difficulties of language barriers and court bias against foreign parties, among other things. As a result, the high costs make almost any consumer-fraud lawsuit across international borders prohibitively expensive.</p>
<h2>Chargebacks: The Private Alternative</h2>
<p>So government does provide consumers with nominal, if often useless, opportunities to pursue redress. On the other hand, credit-card companies know that no one wants to go to small-claims court. More important, they know that the presence of their logos on merchants’ doors and in advertisements is interpreted as a seal of approval, even if not intended as such. It is not good for Visa and the other brands to appear to be associated with crooks or anything else unpleasant to consumers.</p>
<p>Thus the card companies have created their own system for pleasing consumers who have problems with credit transactions. This is called the chargeback. Under the card companies’ chargeback procedures, a consumer can inform his card issuer of his dispute and the issuer will then help him settle things.</p>
<p>To begin chargeback proceedings, a cardholder files a complaint for free, using a form provided by the card company. (It is often included on the back of each month’s billing statement.) On receiving the complaint, the card company may ask the cardholder for documentation to support his claim. If he appears to have a legitimate grievance, the bank will then initiate a charge back against the merchant’s bank—that is, the cardholder’s bank will take the money back from the merchant’s bank. The merchant’s bank has no choice but to allow this because each bank in each card system has contractually agreed to these recourse procedures.</p>
<p>The merchant will then be given an opportunity to produce evidence on his behalf. If his bank believes the transaction was valid, it will initiate a chargeback against the cardholder’s bank—that is, it will take the money back from the cardholder’s bank. If the dispute continues and cannot be resolved between the two banks, it will be arbitrated by the credit-card organization.</p>
<p>Are chargebacks better for consumers than the government’s dispute-resolution system? There is no guarantee that any system of justice will reach the correct result. But consider the following advantages of the private system.</p>
<p>Under the chargeback regime, the procedure for the aggrieved consumer is much simpler and better. When a consumer wants to file a complaint, his card issuer is available to assist him by phone, usually toll-free, 24 hours a day, 365 days a year. Once he files his complaint, he does not need to hire a lawyer—his bank uses its own resources to go to bat for him and puts him on an equal footing with the merchant, regardless of how wealthy or powerful the merchant is.</p>
<p>The bank will be able to reach and process chargebacks against any of its merchants anywhere in the world—except in a few countries, such as France, whose governments have abolished chargebacks by law to protect merchants.</p>
<p>Given these advantages, and the disadvantages of the government system, what credit-card holder wouldn’t prefer the nongovernmental alternative?</p>
<p>This goes to show that the common belief that only government can provide justice in consumer-fraud cases is false. Indeed, as we have seen, government is an inferior provider of justice in this realm.</p>
<h2>Subject to Court Review?</h2>
<p>It might be argued that the relationships among the banks, merchants, and cardholders are governed by contracts, and those contracts, even if they contain private-arbitration clauses, are ultimately subject to review in government courts. That is true, but not really important.</p>
<p>What primarily holds these arrangements together is not the threat of government intervention but the desire of all involved to do business with one another. Cardholders want to pay with plastic, and merchants want to accept it. Thus both cardholders and merchants agree to the terms set forth by their banks and the card associations. This would not change even if government stayed out of disputes; that is, if a card association could not rely on government to enforce a member bank’s agreement to comply with chargeback procedures, that would not spell the end of credit cards or doom the chargeback process.</p>
<p>To minimize risks of noncompliance in the absence of government enforcement, the parties involved might have to spend more to acquire knowledge about the trustworthiness of their contracting partners. For example, more resources might have to be used to investigate merchants before allowing them to accept credit cards. A well-developed credit-bureau system would be ready to assist.</p>
<p>Under such circumstances the banks would have the right incentives to spend the optimal amount of resources to determine who will keep their promises. This is in contrast with government, which has no incentive to spend an optimal amount—even if it could determine that amount—in resolving contract cases when things go wrong.</p>
<p>Today over 18 million merchants accept Visa, and MasterCard runs a close second. In the United States, credit-card acceptance in certain market segments, such as department stores, supermarkets, and gas stations, is nearly universal. On the Internet, of course, it is by far the most commonly used form of payment.</p>
<p>Technology has opened up countless new opportunities for trade for individuals in every part of the world. The credit-card chargeback regime advances those prospects by letting consumers know that they will have an opportunity for redress if they are wronged, and that they will not be forced to rely on outdated, inefficient, ineffective, and costly government courts.</p>
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		<title>Independent Schools at Risk</title>
		<link>http://www.thefreemanonline.org/featured/independent-schools-at-risk/</link>
		<comments>http://www.thefreemanonline.org/featured/independent-schools-at-risk/#comments</comments>
		<pubDate>Wed, 01 Sep 1999 08:00:00 +0000</pubDate>
		<dc:creator>Jacob H. Huebert</dc:creator>
				<category><![CDATA[Featured]]></category>
		<category><![CDATA[colleges]]></category>
		<category><![CDATA[federal funding]]></category>
		<category><![CDATA[federal student aid]]></category>
		<category><![CDATA[government funding]]></category>
		<category><![CDATA[government schools]]></category>
		<category><![CDATA[Grove City College]]></category>
		<category><![CDATA[higher education]]></category>
		<category><![CDATA[Hillsdale College]]></category>
		<category><![CDATA[independent schools]]></category>
		<category><![CDATA[recipient institution]]></category>
		<category><![CDATA[school choice]]></category>
		<category><![CDATA[school vouchers]]></category>
		<category><![CDATA[universities]]></category>

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		<description><![CDATA[Jacob Huebert is a student at Grove City College and an intern at FEE. As discontentment with government schools grows, tax-funded “school choice” has emerged as the leading reform proposal. School-choice programs typically include a voucher plan, although some would make direct payments from the government to private schools. Those proposals are intended to give [...]]]></description>
			<content:encoded><![CDATA[<p><em>Jacob Huebert is a student at Grove City College and an intern at FEE.</em></p>
<p>As discontentment with government schools grows, tax-funded “school choice” has emerged as the leading reform proposal. School-choice programs typically include a voucher plan, although some would make direct payments from the government to private schools. Those proposals are intended to give parents new school alternatives, which are sorely needed, particularly in inner cities. Yet at the same time, private schools, by accepting the money, would become much like the public schools against which they are supposed to compete. Historical examples of government-sponsored school choice, here and in other nations, show that when private schools sign on to such programs, they often sign away their independence.</p>
<p>What has happened in American higher education provides strong evidence that accepting government money leads to a loss of independence. In the 1950s and 1960s, both public and private colleges and universities began accepting direct aid from the federal government.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#1">1</a>]</sup> Nevertheless, it caused alarm among many college presidents, prompting a commission consisting of the presidents of Johns Hopkins University, Union College, the California Institute of Technology, the University of Missouri, Stanford University, and Brown University; the former president of Columbia University; and the provost of Harvard University to declare:</p>
<blockquote><p>We are convinced that it would be fatal were federal support to be substantially expanded. Power means control. Diversity disappears, as control emerges. Under control, our hundreds of universities and colleges would follow the order of one central institution and the freedom of higher education would be lost.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#2">2</a>]</sup></p></blockquote>
<p>Their concerns would prove to be legitimate. As schools quickly became increasingly dependent on government money, the feds began to exert an ever-increasing amount of control over the recipient institutions.</p>
<p>Today, the dependence of schools on federal funds has become such that formerly independent schools are willing to do nearly anything to appease the government in order to retain their funding. William McGill, president of Columbia University in the 1970s, admitted that when the federal government threatened to take away his school&#8217;s funding, which constituted half of its budget, he was ready to “promise almost anything” in order to get the government off Columbia&#8217;s back.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#3">3</a>]</sup> The government was threatening the university because of concerns about minority representation in its student body and faculty. This was despite the fact that Columbia was already “trying every means” to increase minority representation.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#4">4</a>]</sup> It would thus appear that the government was not interested in Columbia&#8217;s attitude toward minorities. It was interested in control.</p>
<h4>The Power to Define</h4>
<p>As federal control over public and private education expanded, so did the very definition of a “recipient institution.” In 1975, the Department of Health, Education, and Welfare (HEW) sent a letter to all colleges and universities asking them to sign an “assurance of compliance” that would guarantee they were complying with federal regulations under Title IX of the Educational Amendments of 1972. Although Title IX was only to apply to programs and activities directly receiving aid, HEW now said the regulations could be applied to an entire institution if even one part received federal aid.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#5">5</a>]</sup></p>
<p>The majority of schools simply signed the form and returned it. Most of the scant few that saw the form as a threat to their independence did nothing at all with it and hoped no one would notice. One school, Hillsdale College, wrote to HEW refusing to sign because of the control that would follow.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#6">6</a>]</sup></p>
<p>Eventually, after another school, Grove City College, became involved, the matter was litigated and ultimately appealed to the Supreme Court of the United States in <em>Grove</em> <em>City College v. Bell</em> (1984). In that case, the court ruled that a school could be considered a recipient institution if <em>any</em> student on campus received an education loan or a grant, and that funds could be withheld from school programs that were found to be not compliant with regulations.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#7">7</a>]</sup></p>
<p>In another blow to private independent schools, Congress passed (over President Ronald Reagan&#8217;s veto) the Civil Rights Restoration Act of 1987, which made it explicit that any school (including any elementary or secondary school) that enrolls students who receive federal aid is subject to regulation by the federal government.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#8">8</a>]</sup> Hillsdale and Grove City were presented with a choice: they could accept government control or they could accept only students who received no government aid. Although it would give them a disadvantage in the market, both schools chose the latter.</p>
<p>Advocates of voucher programs often assume that any school could follow this path and choose not to participate, nullifying concerns about independence. Joseph L. Bast and David Harmer insist: “Participation in voucher plans is never mandatory: those who manage private schools are free to remain outside the program if they believe the [inevitable] accompanying regulations are too burdensome.”<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#9">9</a>]</sup></p>
<p>What Bast and Harmer fail to account for is that schools which refuse vouchers will be at an enormous disadvantage with those that are less concerned about independence, eager to accept vouchers, and happy to offer a “free” education to any student.</p>
<h4>Replacing Government Money</h4>
<p>Hillsdale president George Roche has been forced to deal with loss of federal student-aid funding since the Grove City College decision and the passage of the Civil Rights Restoration Act. In 1992, the school had to raise $1.4 million to replace the money students would otherwise have received through federal grants and loans. This figure is likely to rise because the government has the unfair advantage of being able to supply as much money as it wants to students who choose to accept its aid and who, accordingly, go to other schools. As Roche notes, “It&#8217;s impossible to make money as fast as a counterfeiter.”<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#10">10</a>]</sup></p>
<p>Hillsdale and Grove City have managed to get by without government money, but they are schools with long histories and many generous alumni benefactors. Under “school choice” for primary and secondary education, a new school wishing to remain independent would face a far greater disadvantage.</p>
<p>The implications for primary and secondary education under voucher programs are clear. By the logic of <em>Grove City College</em> and the Civil Rights Restoration Act, any school that accepts a voucher would also almost certainly have to accept what Sheldon Richman calls “a raft of government standards that before long would make the private schools virtually indistinguishable from the public schools.”<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#11">11</a>]</sup> Former voucher advocate David Barulich changed his views on the issue when he realized that since, under a “school choice” program, the government would inevitably define the sort of organization that would be eligible to accept vouchers, it would essentially turn private schools into clones of public schools.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#12">12</a>]</sup></p>
<p>Even the cases in which the federal government uses its power over private schools to prevent discrimination (ostensibly the purpose of Title IX and the Civil Rights Restoration Act) could seriously affect a school&#8217;s ability to maintain its independence and standards, as anti-discrimination statutes have recently been extended to protect “rights” of “new” minorities, that is, claims from special-interest groups.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#13">13</a>]</sup></p>
<p>Further, the U.S. Task Force on Assessing the National Goals Relating to Post-Secondary Education has called for “uniform standards” for all colleges—standards that go well beyond matters of putative civil rights.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#14">14</a>]</sup> There is no question that these developments could undermine the goals and independence of private schools.</p>
<h4>Experience Abroad</h4>
<p>Government money has been used for “private” education in certain other nations for some time, with predictable results. In France and Germany, for example, differences between Catholic schools and ordinary government schools have essentially disappeared since government funding of private religious education began. In these and other European countries, government-enforced uniformity has resulted in the weakening or even the elimination of religious teaching in private religious schools.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#15">15</a>]</sup> When Australia attempted a government-funded “privatization,” the results were similar. Economist Estelle James of the World Bank notes that with the program came “increas[ed] regulation and centralization of decisions and the loss of private school autonomy.”<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#16">16</a>]</sup></p>
<p>James also did an extensive study of the government-funded school choice program in the Netherlands. She notes that with the high level of government funding for private schools has come an amount of regulation that is virtually directly proportionate.</p>
<p>Not only do the regulations for recipient schools specify required numbers of teachers, salaries, and conditions of work, they also limit schools&#8217; authority to fire teachers and never allow schools to fire teachers for lack of competence.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#17">17</a>]</sup> Further, all schools are forced to follow a “uniform curriculum” prescribed by the government.<sup>[<a href="http://www.fee.org/vnews.php?nid=4416#18">18</a>]</sup></p>
<p>The record of American higher education and of government-funded private schooling around the world reveals that government money inevitably leads to government control. While free choice is a worthy cause for those who support liberty and quality education, it may reasonably be concluded from all available evidence that voucher programs and other government subsidies to private schools will lead to increased bureaucracy, increased controls over the lives of individuals, and quite possibly the end of independent private schooling in America. If greater educational freedom and diversity are desired, government money and control are not the means to achieve it.</p>
<hr />
<h4>Notes</h4>
<ol>
<li><a name="1"></a>George Roche, <em>The Fall of the Ivory Tower</em> (Washington, D.C.: Regnery Publishing, Inc., 1994), p. 99.</li>
<li><a name="2"></a><em>Ibid</em>., p. 100.</li>
<li><a name="3"></a><em>Ibid</em>., p. 105.</li>
<li><a name="4"></a><em>Ibid</em>.</li>
<li><a name="5"></a><em>Ibid</em>., p. 112.</li>
<li><a name="6"></a>George Roche, <em>One by One</em> (Hillsdale, Mich.: Hillsdale College Press, 1990), p. 4.</li>
<li><a name="7"></a><em>Ibid</em>., p. 5.</li>
<li><a name="8"></a>Douglas D. Dewey, “Separating School and State: A Prudential Analysis of Tax-Funded Vouchers,” <em>Vouchers and Educational Freedom: A Debate.</em> Cato Policy Analysis No. 269, March 12, 1997. See <a href="http://www.cator.org/pubs/pas/pa-269.html" target="_blank">www.cato.org/pubs/pas/pa-269.html</a>.</li>
<li><a name="9"></a>Joseph L. Bast and David Harmer, “The Libertarian Case for Vouchers and Some Observations on the Anti-Voucher Separationists” in <em>Vouchers and Educational Freedom</em>.</li>
<li><a name="10"></a><em>The Fall of the Ivory Tower</em>, p. 115.</li>
<li><a name="11"></a>Sheldon Richman, <em>Separating School and State: How to Liberate America&#8217;s Families</em> (Fairfax, Va.: The Future of Freedom Foundation, 1994), p. 83.</li>
<li><a name="12"></a>Dewey.</li>
<li><a name="13"></a><em>The Fall of the Ivory Tower</em>, p. 128.</li>
<li><a name="14"></a><em>Ibid</em>., p. 129.</li>
<li><a name="15"></a>Charles L. Glenn, <em>Choice in Schools in Six Nations</em> (Washington, D.C.: U.S. Department of Education, 1989), pp. 41–42, 115, 189; cited in Dewey, p. 37.</li>
<li><a name="16"></a>Estelle James, “Private Education and Redistributive Subsidies in Australia” in <em>Privatization and Its Alternatives</em>, W. Gormley, ed. (Madison: University of Wisconsin Press, 1990), p. 108, cited in Dewey, p. 38.</li>
<li><a name="17"></a>Estelle James, “Public Subsidies for Private and Public Education: The Dutch Case” in <em>Private Education: Studies in Choice and Public Policy</em> (New York: Oxford University Press, 1986), p. 122.</li>
<li><a name="18"></a><em>Ibid</em>., p. 123.</li>
</ol>
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